Trump’s Trade War With China Could Hit Tesla Hard
President Trump is stirring up a different type of war with China and it may impact Tesla more so than any other U.S. automaker.
This trade war between the two nations began with Trump announcing that tariffs would be placed on some $50 billion in Chinese goods.
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It was believed China wouldn’t retaliate, or at least wouldn’t do so swiftly, but that wasn’t the case.
China immediately fired back, saying that it too would place import duties on U.S. items such as soy beans, planes, cars, chemicals and beef.
Trump then Tweeted the following early this morning:
We are not in a trade war with China, that war was lost many years ago by the foolish, or incompetent, people who represented the U.S. Now we have a Trade Deficit of $500 Billion a year, with Intellectual Property Theft of another $300 Billion. We cannot let this continue!
— Donald J. Trump (@realDonaldTrump) April 4, 2018
On the automotive front, just a few U.S. makes import vehicles into China (most automakers have joint venture with Chinese manufacturers to avoid import duties) in volume. Ford’s Lincoln brand and Tesla appear to be most impacted if China moves forward with its retaliatory import duties.
Oddly enough, Tesla CEO Elon Musk urged Trump to push hard in regards to equal import duties for China & the U.S., but the result may be less than ideal. In trying to equalize import duties on autos, China seems to now be willing to strike back hard by upping those duties even more for automakers like Tesla.
It took the electric automaker quite some time to gain a foothold in China in regards to sales, but now it’s a large market for the U.S. automaker, who even today must deal with significant import duties. If those duties increase even more due to this trade war, Tesla will almost certainly see sales fall in China and/or it will have to reconsider its no-joint-venture-with-a-Chinese-automaker position.